Ant Financial to make $200 million investment in South Korea's Kakao Pay

Ant is also involved in investment services and online banking.

The ants are marching into South Korea: Alibaba spinoff Ant Financial is placing a $200 million bet on the fintech arm of messenger maker Kakao, joining the Chinese payments giant with one of South Korea's most dynamic mobile IT companies to tackle a nascent fintech industry that is ripe for disruption.

According to media sources, Kakao Talk has 48 million users.

The companies said the investment was part of a larger strategic partnership to connect Ant's 450 million users worldwide with Kakao Pay, which now has more than 14 million subscribers.

Further, the new partnership will benefit some 7.5 annual Chinese tourists visiting South Korea. This alliance could open the door for Alibaba to push its e-commerce services more aggressively in Korea, and also make it easier for visitors from China to use Alipay. It is installed in over 95% of smartphones in Korea and has long offered mobile payments through its platform. More pertinently, Alipay controls almost 70% of China's mobile payment market.

Ant is now looking to raise as much as $3 billion in debt to fund acquisitions and further foreign investments, a person with direct knowledge of the matter told Reuters earlier this month.

In its latest funding round, Ant is valued at $60 billion and is expected to announce an initial public offering this year. "The challenge is facing strong local players around the world, so it's cheaper to buy into these companies rather than burning money to steal market share from them".

The investment in Kakao Pay comes after Ant Financial bought US-based payments operator MoneyGram for around $880 million in January and struck a partnership deal with Thailand's Ascend Money in November.

Image from Ant Financial.

  • Zachary Reyes